TAIPEI, Taiwan Acer Laboratories Inc. (ALI) is developing a RISC processor and games emulation software that it hopes to use to carve out a new market in China next year for DVD devices that can play PC and Sony Playstation games. Separately, ALI is ramping up a PC chip set for 266-MHz double-data-rate SDRAM with an eye on exploiting a market where Intel Corp. has stumbled with a chip set strategy based on Rambus DRAMs.
The initiatives are part of a two-pronged strategy that ALI's managers hope will propel the company out of a year of relatively flat revenues, estimated to hit about $120 million (U.S.) this year.
ALI has been pursuing the DVD market for about four years, with little results to date. That could change radically next year if U.S. and European DVD makers transfer a significant share of their production to China, where ALI managers are digging in for design wins for China's domestic and export markets.
"I fly to China every two weeks, and I think as much as 40 percent of all DVD players could be made there next year," said Wilson Huang, senior product marketing director for peripheral and multimedia products at ALI, the silicon subsidiary of computer maker Acer Inc. Analysts estimate that 5 million to 10 million DVD players will be produced next year, Huang said.
As China's OEMs take on the job of making and cost-reducing those players, ALI hopes to find a home for its MPEG-2 and DVD servo chips. In addition, it is putting together an ambitious plan to help OEMs in China create a new class of devices for their local market.
Acer is working in parallel in-house and with a design partner on a RISC microprocessor that could roll out next year at speeds of about 300 MHz. And at its labs in China, the company is developing an embedded operating system and emulation software that would run PC and Sony Playstation games on the RISC chip. ALI has already demoed some games running on the emulator and processor for two beta customers.
"We want to turn DVD players for consumers into information appliances," said Huang. ALI managers have not yet decided whether to market the in-house processor design, the partner-led design, or both, Huang added.
In addition, ALI will roll out a browser that supports TV displays and Chinese characters so that the same chip set could be used on a DVD-enabled set-top box that would plays games and surf the Web. The company will also port to its new processor a Chinese-language browser developed by a research institute in Beijing.
"We hope to take a 10-to-12 percent stake of the worldwide DVD chip business next year, and maybe a 25 percent stake of the China DVD market," said Huang.
Noting that ALI's success depends in part on how much DVD production gets transferred to China next year, Huang acknowledged that most of Japan's large consumer electronics manufacturers are unlikely to set up DVD production in China soon. In addition, ALI's multifunction DVD players will have to compete with entrenched, lower-cost Video CD systems now popular in China and Hong Kong.
Meanwhile, Acer Labs will start production in November of a chip set that supports Advanced Micro Devices Inc.'s Athlon processor and 266-MHz DDR SDRAM. AMD will itself roll out later this month faster versions of the Athlon that supports a 266-MHz bus, up from the current 200-MHz bus.
The faster Athlon processors combined with the chip sets and DDR memory could outperform systems with Intel Pentium III processors and Rambus DRAMs, said Bruce Tai, product marketing director, systems products division at ALI.
ALI hopes to have chip sets that support both the AMD Athlon and Intel's upcoming Pentium 4 processors. ALI is negotiating with Intel for a license to its Pentium 4 bus, which it hopes to have in time for products that could roll early next year. ALI does not expect any imminent announcement on that front, however.
Intel initially planned to only offer chip sets for the Pentium 4 that supported Rambus DRAM, but backtracked in August when it said it will also support SDRAM in a chip set due sometime next year. Intel has not said whether it will support DDR.
As Intel ponders its options, "We think we could double our chip set sales in 2001," Tai said. ALI also plans to refresh its line of chip sets for notebook computers.
But ALI's success depends in part on obtaining a license to the Pentium 4 bus from Intel, and on Intel's decision to quickly field SDRAM and DDR chip sets of its own. Rumors are already sweeping Taipei that Intel plans a chip set that would support SDRAM and DDR for the Pentium III, a mainstream target where much of ALI's business exists today.